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Does Input Sector Liberalization Promote Quality Innovation and Exports?

  • Rajat Acharyya
  • Swapnendu Bandyopadhyay(Banerjee)

This paper examines the relationship between input sector liberalization and product quality innovation and export orientation by a LDC firm given the complementarity between high input quality and high product quality. We show that input sector liberalization per se may not induce quality innovation and outward orientation. In fact in some situations ceteris paribus input sector liberalization may increase the odds in favour of low quality production. We show that total output sector liberalization, or surprisingly, a suitable degree of output sector protection then is needed to be combined with input sector liberalization so that quality innovation is induced.

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File URL: http://repec.org/esFEAM04/up.3669.1080645330.pdf
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Paper provided by Econometric Society in its series Econometric Society 2004 Far Eastern Meetings with number 650.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:feam04:650
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  1. David T. Coe & Elhanan Helpman, 1993. "International R&D Spillovers," NBER Working Papers 4444, National Bureau of Economic Research, Inc.
  2. Shang-Jin Wei, 1997. "Gradualism versus Big Bang: Speed and Sustainability of Reforms," Canadian Journal of Economics, Canadian Economics Association, vol. 30(4), pages 1234-47, November.
  3. Desai, Ashok V., 1980. "The origin and direction of industrial R&D in India," Research Policy, Elsevier, vol. 9(1), pages 74-96, January.
  4. Vandenbussche, Hylke & Wauthy, Xavier, 2001. "Inflicting injury through product quality: how European antidumping policy disadvantages European producers," European Journal of Political Economy, Elsevier, vol. 17(1), pages 101-116, March.
  5. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
  6. Keller, Wolfgang, 2002. "International Technology Diffusion," CEPR Discussion Papers 3133, C.E.P.R. Discussion Papers.
  7. Clemenz, Gerhard, 1990. "International R&D competition and trade policy," Journal of International Economics, Elsevier, vol. 28(1-2), pages 93-113, February.
  8. Feenstra, Robert C, 1988. "Quality Change under Trade Restraints in Japanese Autos," The Quarterly Journal of Economics, MIT Press, vol. 103(1), pages 131-46, February.
  9. Herguera, Inigo & Kujal, Praveen & Petrakis, Emmanuel, 2002. "Tariffs, quality reversals and exit in vertically differentiated industries," Journal of International Economics, Elsevier, vol. 58(2), pages 467-492, December.
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